Leading Indicator of Employment

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Leading Indicator of Employment (LIEmp)

The Leading Indicator of Employment aims to forecast the main movements in the labor market in Brazil, based on data extracted from the Business and Consumer Surveys produced by FGV/IBRE.

The data related to expectations regarding the labor market are extracted from the Consumer Survey, while date related to expected employment, the current business situation, and the business trend are individually extracted from the Industry Survey and the Services Survey.

The term "employment" in the Consumer Survey covers questions on the present and future situation of the labor market. The LIEmp includes results obtained for the question in which the consumer reveals their expectations for the coming months regarding the labor market in the city where they reside. The Consumer Survey indicator, based on the question on the future situation of the labor market, is constructed from the disaggregated data of the seven main capital cities in Brazil.

The indicators for each of the capitals are seasonally adjusted and expressed as deviations from the long-term trend through the extraction of the estimated trend. The indicators are aggregated using weighting generated by Principal Component Analysis (PCA) to form the Future Local Employment Indicator of the Consumer Survey.

The Leading Indicator of Employment also includes six series from the Business Surveys, being three series from the Industry Survey and three series from the Services Survey.

The Manufacturing Industry Survey covers aspects that deal with the present and the near future, with data aggregated from 21 types of industry. Studies have tested different forms of aggregation from 14 subsectors with the aim of elaborating the LIEmp. The indicators for each of the sub-sectors are seasonally adjusted and expressed as deviations from the long-term trend through the extraction of the estimated trend. 

In general terms, the Services Sector Survey covers all service sectors except government, continuing education and health activities, the financial sector, and trade. The sectoral segments are determined using the National Classification of Economic Activities, version 2.0 (NCEA 2.0), published by IBGE. The most broken-down results are obtained for twenty-nine Groups (three digits) of NCEA 2.0 and aggregated into the seven Segments (four-digit sum) of NCEA 2.0 of the IBGE statistics for the Services sector. The indicators for each of the seven segments are seasonally adjusted and expressed as deviations from the long-term trend through the extraction of the estimated trend. .

To aggregate the seven indicators described above, the weights are given by Principal Component Analysis. The indicator starts in June 2008, the date from which the survey data used is available, and is based on June 2008 = 100.

The LIEmp is an indicator created from statistical data produced by IBRE/FGV. The choice of series and weights was carried out through statistical methods and may undergo periodic revisions. On such an occasion, any alterations will not cause changes to previously published series.

Main Uses:
Forecasting of the direction of the labor market.

Geographic Coverage:
National.

Frequency:
Monthly.

Historical Series:
June 2008.